End the Fed by Ron Paul

During a Republican primary campaign rally at the University of Michigan in October, 2007, Rep. Ron Paul was greeted by supporters who began shouting “End the Fed, end the Fed,” as he began talking about monetary policy.

The cry resonated, and soon the whole crowd had taken up the cheer and some were holding burning dollar bills as if sending a message to the central bank. Almost a year later, at Paul’s counterconvention in Minneapolis, 12,000 people started the chant before Paul even mentioned the Federal Reserve. With that, the title for Paul’s latest book, End the Fed, was written.

Paul is an 11-term congressman from Texas, and a sound monetary policy has been one of his major policy aims. He currently has a bill before Congress that would lead to an audit of the Federal Reserve. The bill has 317 co-sponsors in the 435-member House of Representatives.

The response of his supporters during his campaign and the subsequent support of his fellow members of Congress have encouraged Paul that Americans are beginning to understand the devastating effects the Federal Reserve has had on America’s economy.

End the Fed begins with Paul laying out the argument for why people should care about and question the basis for the Federal Reserve. He writes:

“…the Fed has one power that is unique to it alone: it enables the creation of money out of thin air. Sometimes it makes vast new amounts. Sometimes it makes lesser amounts. The money takes a variety of forms and enters the system in various ways. And the Fed does this through techniques such as open-market operations, changing reserve ratios, and manipulating interest rates, operations that all result in money creation.

“Given that money is one half of every commercial transaction and that whole civilizations literally rise and fall based on the quality of their money, we are talking about an awesome power, one that flies under cover of night. It is the power to weave illusions that appear real as long as they last. That is the very core of the Fed’s power.”

Paul writes that some like the illusion and just want to get back to the time when everything was good. But those “good times” were a mirage—a creation of the appearance of wealth by the Fed.

The book gives a brief history lesson of the origins of the central bank in general in the United States, and the Federal Reserve in particular. The book is also partly autobiographical, as Paul describes boyhood lessons and influences that piqued his interest in money and monetary policy.

While it was formed under the idea that it would be able to protect the monetary and financial system against inflation and violent swings in market activity, the Fed has done just the opposite. Paul quoted a statement from the Comptroller of the Currency in 1914: “…under the operation of this law such financial and commercial crisis, or ‘panics,’ as the country experienced in 1873, in 1893, and again in 1907, with the attendant misfortunes and prostrations, seem to be mathematically impossible.”

Yet Paul points out that the National Bureau of Economic Research says there were recessions in each of the following years in the 20th Century: 1918-1919, 1920-1921, 1923-1924, 1926-1927, 1929-1933, 1937-1938, 1945, 1948-1949, 1953-1954, 1957-1958, 1960-1961, 1969-1970, 1973-1975, 1980, 1981-1982, 1990-1991, 2001 and 2007, which is the current panic of which there is no end yet in sight.

And the Fed has devastated the purchasing power of the dollar, Paul writes. The goods and services you could buy in 1913 for $1 now cost nearly $21. Put another way, the 1913 dollar is now worth less than five cents. We might say the government has stolen 95 cents of every dollar, according to Paul.

Central banks such as the Federal Reserve, Paul writes, prove useful for governments wishing to fund wars. The elastic money supply of a system based on central banking allows governments to pay for their wars without worrying about where the money will come from. Without central banks, governments were forced to economize their resources and they often found diplomatic solutions to their disputes. If wars actually started, countries sought to end them as quickly as possible.

But for European governments in the late 19th Century, fiscal limits were removed because of central banks. Now, governments were free to print what they needed and governments were more willing to pick fights and pull the trigger.

“Might a diplomatic solution have been found for the struggles that led to World War I had the Germans and English not had recourse to the printing press and a lender of last resort?” Paul asks.

After laying historical groundwork of the devastation the Federal Reserve has caused to the American economy and about discussions he has had with Federal Reserve chairmen Alan Greenspan and Ben Bernanke, Paul begins making the case for abolition of the Fed.

He makes his arguments on philosophical, Constitutional, economic and libertarian grounds. He then explains the consequences and provides a roadmap for the way out of the mess.

End the Fed provides an excellent overview of the nature, origin and result of a central banking system and also opens the doors on Paul’s fiscal views. Anyone interested in economics and monetary policy of the U.S. would benefit from reading this book.

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Bob Livingston

founder of Personal Liberty Digest™, is an ultra-conservative American author and editor of The Bob Livingston Letter™, in circulation since 1969. Bob has devoted much of his life to research and the quest for truth on a variety of subjects. Bob specializes in health issues such as nutritional supplements and alternatives to drugs, as well as issues of privacy (both personal and financial), asset protection and the preservation of freedom.

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